March Towards Socialism Part 3

So we have finished with the War between the states. A quick summary statement there was that this was one of the big moments in our march towards socialism, as it showed the power of the federal goverment to control the states, to the point of levying tariffs and not allowing states to secede from the union when they felt that tyranny was coming. However there is still much to cover before we get to the current administration and the moves happening today. Now, admittedly, I am able to cover the Civil War era fairly well. As I said, I grew up right next to Gettysburg, and a photographic memory coupled with annual field trips and reading can sink in quite well.

But on this next section I will rely on those who know better to correct me where I trip up. I have done the research and feel I will be accurate with what I present. But I do worry that I will leave something important out. I am operating mostly from memory of studying history the first time I went to college, which was 20 years ago. So I have ideas in my head, and I go and research them, but there may be ideas that I forgot or that were never there in the first place for me to think about and research! So if I miss something, please be kind, and simply point out my mistakes. It is late after all, my brain may have already gone to bed and I just don’t know it yet.

Following the Civil War was the progressive era, which perhaps was one of the most damaging aspects of our history in terms of individual liberty being taken away. The true progressive era began in the late 1800’s and lasted through the 1920’s. While progressive thinking has continued and has further evolved, this was the period where it took hold and brought massive change to our country that would set the table for many future actions, including those of the Obama administration.

Progressives advocated a wide range of economic, political, social, and moral reforms.Initially the movement was successful at local level, and then it progressed to state and gradually national. Both the reformers and their opponents were predominantly members of the middle class. There were many changes made to our Constitution as a result of the progressive movement, including Amendments 16 (income tax), 17 (Direct election of Senators), 18 (Prohibition), and 19 (Women’s Suffrage).

In the Gilded Age (late 19th century) the parties were reluctant to involve the federal government too heavily in the private sector, except in the area of railroads and tariffs. In general, they accepted the concept of lassiez-faire, a doctrine opposing government interference in the economy except to maintain law and order. This attitude started to change during the depression of the 1890’s, when small business, farm, and labour movements began asking the government to intercede on their behalf.

By the turn of the century, a middle class had developed that was leery of both the business elite and the radical political movements of farmers and laborers in the Midwest and West. Known as Progressives, these people favored government regulation of business practices to, in their minds, ensure competition and free enterprise. Congress enacted a law regulating railroads in 1887 (Interstate Commerce Act), and one preventing large firms from controlling a single industry in 1890 (Sherman Anti-Trust Act). These laws were not rigorously enforced, however, until the years between 1900 and 1920.

Many of today’s U.S. regulatory agencies were created during these years, including the Interstate Commerce Commission and the Federal Trade Commission. Muckrakers were journalists who encouraged readers to demand more regulation of business. As a result, the federal government reacted with increased regulation on business. For example, the federal government responded to Upton Sinclair’s book (The Jungle, 1906) with the new regulatory Food and Drug Administration.

The Progressive Movement was an effort to cure many of the ills of American society that had developed during the great spurt of industrial growth in the last quarter of the 19th century. Much had been accomplished in America, but not all citizens shared in the new wealth, prestige, and optimism. Progressives lived in the conviction that government must play a role to solve social problems and establish fairness in economic matters. The progressives of this period were the liberals of today, determined to increase government’s role in equaling out the American experience by taking from the wealthy. As part of the second reform period, Progressivism was rooted in the belief, certainly not shared by all, that man was capable of improving the lot of all within society. As such, it was a rejection of Social Darwinism (which I am a believer in), the position taken by many of the rich and powerful figures of the day (and I am certainly not rich and powerful).

A vocal minority supported socialism, with government ownership of the means of production. Other Progressive reforms followed in the form of a conservation movement, railroad legislation, and food and drug laws. Such reforms as the direct primary, secret ballot, and the initiative, referendum, and recall were effected. Local governments were strengthened by the widespread use of trained professionals, particularly with the city manager system replacing the all-too-frequently corrupt mayoral system.

What is important to remember about the progressives of that time are that their offspring were the fascists (go back and re-read Part 2 with Fascism definition added, because that is what the progressive movement was actually promoting: fascism, not socialism). And the grandchildren of those fascists are the modern day progressives and liberals who are now moving towards socialism (Hence the March to Socialism theme, is it all coming together now?).

But a discussion of the progressive movement is just that, talk about a movement of the times. It wouldn’t be complete without the discussion of the Presidents who were central to the movement and who were the catalyst for the lasting changes made to the Constitution and our Federal Government that would resonate through history and set the stage for a continued march to socialism. It was these Presidents that moved from “Progressive” to “Fascist”. And remember here folks, fascism is not meant as a “negative” term, nor is “socialism”. These are merely the accurate terms for what is happening at the times mentioned. Those moving us there tell everyone we are using alarmist terms to “rile people up”, while never admitting that they are the accurate terms.

THEODORE ROOSEVELT – The 26th President 1901-1909

Good ‘ol Teddy Roosevelt was the first of the truly progressive Presidents. He took the view that the President as a “steward of the people” should take whatever action necessary for the public good unless expressly forbidden by law or the Constitution. “I did not usurp power,” he wrote, “but I did greatly broaden the use of executive power.” And that he did. What is not realized by many is the dramatic changes that Teddy brought in terms of how we view the rest of the world. We were blossoming into a major power. We were no longer the little colonies that felt lucky to be free of Britain’s tyranny. And Teddy knew that, and acted on it.

It was Teddy who was the first President to use the power and threat of our military to project our morals and values upon the world. This was in line with the progressive movement of the time. There is a lack of major or continuous military involvement on foreign soil prior to his Presidency, although I do note that this may have been because he was the first President with a powerful enough military to do so, with the addition of the Great White Fleet and expansion of the military. He was much more involved in foreign relations, brokering the end of the Russo-Japanese War. He also added the Roosevelt Corollary to the Monroe Doctrine, which stated that the United States and only the United States could intervene in Latin American affairs when corruption of governments made it necessary.

Roosevelt’s foreign policy is often referred to as the Big Stick Policy, which was mainly in respect to Roosevelt’s ideas of negotiation. He had impact in Puerto Rico, the Phillipines, Cuba and Panama as well. He is credited with the creation of the Panama Canal. In doing so he supported Panamanian separation from Columbia, and formed Panama as a nation, with the United States even writing their constitution for them.

As President, Roosevelt held the ideal that the Government should be the great arbiter of the conflicting economic forces in the Nation, especially between capital and labor, guaranteeing justice to each and dispensing favors to none. Roosevelt’s presidency marked a transfer of regulation from the states to the federal government. Roosevelt firmly believed: “The Government must in increasing degree supervise and regulate the workings of the railways engaged in interstate commerce.” Roosevelt emerged spectacularly as a “trust buster” by forcing the dissolution of a great railroad combination in the Northwest. Other antitrust suits under the Sherman Act followed. He distrusted wealthy businessmen and dissolved forty monopolistic corporations. He was clear, however, to show that he did not disagree with trusts and capitalism in principle, but was only against corrupt, illegal practices. He was the first U.S. president to call for Universal Health Care and National Health Insurance.

WOODROW WILSON – The 28th President 1913-1921

Wilson started Congressional Government, his best known political work, as an argument for a parliamentary system, but Congressional Government emerged as a critical description of America’s system. Wilson believed that America’s intricate system of checks and balances was the cause of the problems in American governance. He said that the divided power made it impossible for voters to see who was accountable for ill-doing. If government behaved badly.

The longest section of Congressional Government is on the US House of Representatives, where Wilson poured out scorn for the committee system. Wilson said that the committee system was fundamentally undemocratic because committee chairs, who ruled by seniority, were responsible to no one except their constituents, even though they determined national policy.In addition to its undemocratic nature, Wilson also believed that the Congressional Committee System facilitated corruption (He was certainly correct on this count, can you say Barney Franks and Chris Dodd?).

Wilson developed a program of progressive reform and asserted international leadership in building a new world order. In 1917 he proclaimed American entrance into World War I a crusade to make the world “safe for democracy.” (and the rest of that story, as they say, is history). American foreign relations since 1914 have rested on Wilsonian idealism, says historian David Kennedy, even if adjusted somewhat by the “realism” represented by FDR and Kissinger. Kennedy argues that every president since Wilson has, “embraced the core precepts of Wilsonianism. Nixon himself hung Wilson’s portrait in the White House Cabinet Room. Wilson’s ideas continue to dominate American foreign policy in the twenty-first century. In the aftermath of 9/11 they have, if anything, taken on even greater vitality.”

Wilson experienced early success by implementing his “New Freedom” pledges of antitrust modification, tariff revision, and reform in banking and currency matters. Wilson secured passage of the Federal Reserve system in late 1913. He took a plan that had been designed by Nelson Aldrich and banker, Paul Warburg. Wilson had to find a middle ground between those who supported the Aldrich Plan and those who opposed it. The opposition wanted a government-owned central bank which could print paper money whenever Congress wanted. Wilson’s alternate plan allowed the large banks to control the new federal reserve, but simultaneously created a central board made up of persons appointed by the President and approved by Congress who would outnumber the board members selected by bankers. Thanks for creating the Fed, Wilson. Jerk.

Also in 1913, the Underwood Tariff Act, better known as the US Revenue Act, lowered basic tariff rates from 40% to 25%. The revenue thereby lost was replaced by a new federal income tax, which was amended to the Constitution as the 16th Amendment (thus the beginning of government randomly taking a percentage of the fruits of your labor to spend wherever they saw fit, and that percentage has gone up ever since). The incomes of couples exceeding $4,000, as well as those of single persons earning $3,000 or more, were subject to a one percent federal tax.Further, the measure provided a progressive tax structure, meaning that high income earners were required to pay at higher rates (thus the beginning of screwing the wealthy by taking a higher percentage of the fruits of their labor). It would require only a few years for the federal income tax to become the chief source of income for the government, far outdistancing tariff revenues. Less than 1 % of the population paid federal income tax at the time. Thanks for creating income taxes Wilson. Jerk.

Wilson broke with the “big-lawsuit” tradition trustbusting, finding a new approach to encouraging competition through the Federal Trade Commission, which stopped “unfair” trade practices. In addition, he pushed through Congress the Clayton Anti-trust Act making certain business practices illegal (such as price discrimination, agreements forbidding retailers from handling other companies’ products, and directorates and agreements to control other companies). The power of this legislation was greater than previous anti-trust laws, because individual officers of corporations could be held responsible if their companies violated the laws. More importantly, the new laws set out clear guidelines that corporations could follow,

So basically Wilson expanded government’s powers over the free market even further, using public sentiment against a few out of control companies to warrant sweeping progressive reform that gave government unprecedented power. Good thing something like that never happened again…. wait

32. FRANKLIN D. ROOSEVELT 1933-1945 (4 Terms!)

Assuming the Presidency at the depth of the Great Depression, Franklin D. Roosevelt helped the American people “regain faith in themselves”. He campaigned on the platform of “Hope” (sound familiar?) and he promised prompt, vigorous action. By March, 4 months into his first term, there were 13,000,000 unemployed, and almost every bank was closed (sound familiar again? just substitute “bailed out” for closed). In his first “hundred days,” he proposed, and Congress enacted, a sweeping program to bring recovery to business and agriculture, relief to the unemployed and to those in danger of losing farms and homes (are we talking about 1933 or 2009?). Beginning with his inauguration address, Roosevelt began blaming the economic crisis on bankers and financiers, the quest for profit, and the self-interest basis of capitalism (are we talking about FDR or Obama, I am so confused). From March 9 to June 16, 1933, he sent Congress a record number of bills, all of which passed easily (I KNEW Pelosi and Reid were older than they claim!).

During the Great Depression of the 1930s, Roosevelt created the New Deal to provide relief for the unemployed, recovery of the economy, and reform of the economic and banking systems, through various agencies, such as the Works Project Administration(WPA), National Recovery Administration (NRA), and the Agricultural Adjustment Administration (AAA). Although recovery of the economy was incomplete until World War II, several programs he initiated, such as the FDIC, Tennessee Valley Authority (TVA), and the SEC, continue to have instrumental roles in the nation’s commerce. Some of his other legacies include the Social Security Administration that the National Labor Relations Board (unions).

By 1935, both bankers and businessmen had become wary of Roosevelt’s New Deal. Roosevelt responded with a new program of reform: Social Security, heavier taxes on the wealthy, new controls over banks and public utilities (I have to say it again, sound familiar?). Recovery was pursued through “pump-priming” (that is, federal spending). The NIRA included $3.3 billion of spending through the PWA to stimulate the economy. Roosevelt created the largest government-owned industrial enterprise in American history, the TVA, which built dams and power stations, controlled floods, and modernized agriculture and home conditions in the poverty-stricken Tennessee Valley.

FDR Era Cartoon

Roosevelt tried to keep his campaign promise by cutting the regular federal budget, including 40% cuts to veterans’ benefits (sound familiar, like say… trying to make veterans private health insurance pay for war wounds?) and cuts in overall military spending. He removed 500,000 veterans and widows from the pension rolls and slashed benefits for the remainder (as always, screw the vets). Protests erupted, led by the VFW. Roosevelt held his ground, but when the angry veterans formed a coalition with Senator Huey Long and passed a huge bonus bill over his veto, he was defeated. He succeeded in cutting federal salaries and the military and naval budgets. He reduced spending on research.

In 1936 he was re-elected by a top-heavy margin. Feeling he was armed with a popular mandate, he sought legislation to enlarge the Supreme Court, which had been ruling key New Deal measures as unconstitutional (because when the courts deem your government moves outside the constitutional authority of government, the proper move is to change the courts? Perhaps Obama will expand to 11 justices, allowing him to appoint more liberal ones and control those too). Roosevelt lost the Supreme Court battle, but a revolution in constitutional law took place. Thereafter the Government could legally regulate the economy. During the war he pushed for even higher income tax rates for individuals (reaching a marginal tax rate of 91%) and corporations and a cap on high salaries for executives (I won’t even say it this time). In order to fund the war, Congress broadened the base so that almost every employee paid federal income taxes, and introduced withholding taxes in 1943. Thanks for that Roosevelt. Jerk.

I could go on listing FDR policies and programs for days, but I think most of you know the deal. FDR sponsored the largest explosion of government expansion and control in history. As the third of the truly progressive Presidents, he was able to do the most in order to incorporate the the true meaning of fascism into the US federal government. As I am sure you can see, he is responsible for so much of the welfare, government control, and arrogant belief in the ability to legislate the economy that is the hallmark of today’s far left. I apologize for all the “sound familiar” comments, but I felt it important to make sure that everyone can see that the game being played in Washington today is not a new game. I thought it important that we see how radical reform can look when a party claims they have a mandate and a crisis. The progressives provided the template for the current wave of hysteria in today’s America.

I apologize for the length of this one. There was a lot to cover in my Part 3 lest I find myself adding even more parts. As it stands, I expect to wrap this up in one or two more parts. The next part will be Sunday night. Tomorrow is Friday so Guest Commentary Day! Then Saturday night is an easier read. Part 4 Sunday! I hope everyone is getting something out of this series of articles. I know it seems a bit boring to go through history. But I think to understand where we are heading we have to understand how we got here. I think the FDR section above especially shows us some very relevant history.

Most people now believe that the New Deal was basically a failure and that it took WW2 to get us out of the Depression.

WW2 necessitated MASSIVE production from US Industries on a previously unheard-of scale. Suddenly many of the men that would have been working in these now booming industries were off fighting the war, and everyone else (including many women) were suddenly gainfully employed. The War essentially caused a huge economic boom.

Some conspiracy theorists say that Roosevelt was aware that the New Deal was failing and that he had credible information ahead of time that the Japanese were going to bomb Pearl Harbor, but he let it happen anyway in order to overcome the opposition within the US to getting involved in the war (we managed to avoid involvement from 1939 to 1941 after all). These conspiracy theorists speculate that Roosevelt knew that US involvement in the War was necessary for the resuccitation of the US economy.

Whether that part is actually true or not, who knows… but it makes an interesting conspiracy theory 🙂

Right Peter. Things were getting a little better, but the US di not begin to recover from the Depression until WW2 began. That is when it began, not when the US entered it. The US began to profit from the others who were involved in the war. But we really came out, as did the rest, by the World War. That kind of took all the attention. Don’t nothin’ solve economic crisis like a good ol’ war!

He wanted involvement in WW2 so to expand US global hegemony. This is merely the continuation of US foreign policy since Lincoln…war with Spain got the Cuba, Philippines, Panama, and Hawaii (yes, I know Hawaii was not a Spanish colony – however, with the take over of Philippines, Hawaii become a target for a strategic control of the Pacific)…

The territorial USA is unconquerable and immune to invasion, thus would guaranteed to survive the war completely intact.

The European devastation also destroyed Europe’s last remaining global reach. The European’s were gutted and with them, their colonial empires. The US happily took them over.

I understand the disdain for wasteful spending and big government over regulation, but do you really have problems with suffrage, anti-trust laws, FDIC, and public works programs to build railways, roads and dams?

Anti-trust laws = maybe a good thing, maybe not. True, a monopolistic corporation shuts out all competition (Microsoft anyone?) and therefore can exert almost total price control. However, how much regulation of private corporations is good, and how much is too much?

Public Works Projects to build railways, roads, and dams = meh, ok. Apparently infrastructure simply isn’t something the private sector handles very well on its own…but why not? Perhaps it just isn’t seen as profitable (until the Government takes it over and hires union contractors to do the work… then someone can make money off of it)… not totally sure what I think about that one.

FDIC: Not totally familliar with exactly what they do other than insure our deposits in case of bank failures. I do know that they can put a bank into “receivership” if the bank is failing (note that this path was NOT taken recently), and I know that they regulate banks in other ways as well. I would need more information on what the FDIC actually does before I state whether I think it is a good or a bad entity.

Anti-trust is a populast bogey-man. All the long lasting,and most damaging, monopolies have been sanctioned and made possible by the govt.
In an open and free market a monopoly can not persist. By the way, the first railroads and public roads were all private, and profitable. It wasn’t until the govt got involved that we adopted this cultural belief that “public transportation has always required govt subsidy”.

I think you also miss the point that US is reviewing history, from which we can find the basis for many of todays issues. Don’t focus so much on details as the overall philosophy. The key lesson is that our country took a fork in the road in the late 1800’s that turned away from the philisophical values embodied in our constitution. Some realized it at the time, but that number continues to grow. Most of those who scream today that we have left the constitution and our liberty behind think it is a more recent phenomenon. By understanding how long this has been happening, and all the nuances it takes, will lead us to greater understanding of why the two major political parties don’t seem all that different to us. We will then know why we feel frustrated, angry and confused, and most importantly it will give us a more realistic view of the long battle needed to restore the govt we feel is needed, based on those values that supported our original constitution.

Sorry I got a little long winded and perhaps some of that was for general consumption.
Hope you have a great day
JAC

I understand roads and railways, but not dams. I don’t want private companys owning rivers or with the authority to dam public waterways without government intervention. Nor woulf i really want any private company in charge of any power plant (especially nukes) to be void of oversite I guess I don’t know enough about FDIC either except the insurance it provides me so I won’t go there.

Also I know the OP is a general topic on this ongoing process but I disagree with a blanket statement that all progressivism is inherently wrong, unconstitutional, what have you.

As far as anti trust, I feel the disired end game for all capital enterprises would be a monopoly. A true monopoly with no oversight IMO is the most undemocratic enterprise. In effect it becomes like another form of government (or tyranny) with zero consumer representation I don’t see how in a completely free market you think they just won’t happen. and yes govt controlled/subsidized monopolies are just as bad.

Private companies would not own public water nor could they construct a dam without govt approval, and probably inspection. There are thousands of privated dams throughout the USA. The real question is why did the feds have to build large hydro-electric dams? Because they wanted central planning to control jobs and energy costs.

Out here dams impact to fisheries is a huge issue. Now lets think for a moment. Suppose private companies would have had to raise the money to build those large dams on the Columbia. I bet there wouldn’t be very many, if any at all. It was the govts power to tax or borrow, or both, that enabled these large projects. And yes the cheap electricity enabled the west to develop the way it has. But was that the best thing for the USA? The midwest and east has been bitching for years about our “subsidized electricity”. It puts us at a competitive advantage over the rest. I also remember alot of very unhappy folks that lost their homes when the TVA came along.

I am pretty sure private, or quasi-private, companies do run the nuke power plants already. Again, permitting processes can be used.

I challenge anyone to provide an example of a monopoly that has existed, on large scale, that was not supported by govt!! They just don’t last Skot because of the way they affect pricing and return on capital. If they are truly efficient as monopoly theory goes, then they are providing the lowest cost product to the consumer possible. If they become inefficient, by cutting prices to hold out competition, capital will go elsewhere, to the next competitor. Also, their is nothing democratic about private enterprise and there should not be any such thing. Those consumers who invest are represented with their shareholder vote. Even monopolies must answer to it’s shareholders. Don’t confuse monopoly with product safety, they are not related.

And yes everone, you are hearing JAC propose that there is a role for some regulation. That is because our society is not ready for total conversion to a true fee market. We are not moral enough, but we’ll get into that aspect later.

No one here has said progressivism is unconstitutional. I happen to believe it is wrong as it leads to statism which is contrary to the principle of individual liberty. US is trying to explain that the original “progressive” movement was the forfather if you will of fascism and modern liberalism and then the modern progressive movement. Their roots are intertwined and sometimes mixed with socialism, at least the USA versions of both. The POLICIES of the progressives were almost all ruled as unconstitutional until right after FDR tried to stack the court. Suddenly the Supremes started seeing things differently and thus began a long period of judical activism, and erosion of our constitution.

Remember Skot, while most of us here have little use for “progressive” or “modern liberal” philosphies and policies, where we stand very firm is in our constitution. If those who believe in these policies really think most American want them, then I say start offering amendments to the constitution that give congress the authority they have usurped from the American People, without our permission.

I hope this helps clarify and increase your understanding of why I for one say the things I do.
I think that those “liberals” or “progressives” who publicly state their support for liberty and democracy would join us in our efforts instead of condeming us. You too can be a Radical Rightwing Liberal. Come on in, the water is fine!

there are what the government call “natural monopolies” which are the the companies that provide water, power, and other things that every house needs in a region(examples like Duke Power for NC or how Enron was for CA). The reason is because every power company uses seperate power lines so if there was a dozen companies there would be too many power lines. So for convenience only one company controls a region, but because of the potential monopoly the government heavily regulates those companies.

And the question NC, is whether those natural monopolies are a good thing. The further question is whether they truly need the heavy regulation that they are placed under. A couple of points to this. You seem to be in NC, as am I, and I fall under Duke Power’s area. It seems as though “regulation” does little slow down Duke Power’s ability to raise rates or gouge customers. Are you aware that they have raised the rate for your power 14 times in the last 2 years. All quietly mind you. Go back and look at your bills.

Without government being involved, people might pay better attention. As it is, the people blindly rely on government to protect them, when no such protection is happening. A natural monopoly as you define it doesn’t mean that there are no alternatives. A free market without government interference would perhaps spawn a rival for Duke Power that would provide an alternative and drive prices down. The government supported monopoly simply keeps competition out and allows them to do whatever they want. Anyone who went through that ice storm with me in 2002, saw first hand how the wealthy had their power on the next day while the rest of us waited. I personally waited almost two weeks before the power came back on. Candle light and cold showers did not make me happy.

I wasn’t saying if they were good or bad I was just explaining what a natural monopoly was. Now if you go into if they are good or bad then I agree with you competition would definetly help(not too mention that government regulation didn’t stop the Enron scandal in CA). It would also force power companies to research and develope better and more efficient energy sorces instead of waiting for the government to do it for them.

I am completely aware that we are a little off topic here, and I am not sure how it works in NC, but in MD we had regulation for a long time and they finally deregulated. We ended up with what was escentially the power bubble bursting. Apparently in the controlling of the prices during regulation, they stopped many price increases. When they deregulated, the bubble burst and they raised rates continually for 2 years in what seemed like an exagerated and overindulgent fashion. Theya re again considdering re-regulation in an effort to control price increases where I see it as the natural correction of the market. We have just recently had a company come in and supply wind power at a current rate very similar to BGE, only you can lock in the price for 2 years. There is finally competition starting to happen and now they want to re-regulate.
My oppinion is that they are affriad that losing control will drive the prices down and in turn reduce the revenue since the amount being taxed will be driven down… do I sound skewed?
I agree that we are not ready for the free market only because it would cause all of the bubbles to burst before the competition figured out their strategies and it self corrected to drive prices down… we are too impatient to let that all happen and someone will just start saying it isn’t working and re-regulate or stifle the free market.

The biggest challenge of most people is the range of time they view effects.

The Great Depression was a direct consequence of WW1 – and government’s attempt to hide its devastation of the economy by using the printing press and easy money to artificially inflate their economies. When they could not continue this charade, it came crashing down with a vengeance – called the Depression.

But by deferring this reckoning by a decade, governments could shift the blame away from themselves and blame the ‘exuberance’ of the free market – which governments caused as well!

WW2 allowed governments to inflate the economy once again while at the same time impose wage and price controls over the economy (remember rationing??). Governments printed money like drunk sailors, but with wage and price controls, prevented the mechanism of inflation to correct their distortions. Thus, the entire weight of the war was crushed on the labor of the people as their economy was stolen away from them by the government. Working long hard days, while all their goods were rationed – thus, they were unable to receive the value of their work.

After the war, governments continued to inflate their currencies, by exporting this inflation to the defeated and destroyed nations.

This economic disaster today is the reckoning of all these policies since 1914 – all piled up, with interest.

The way I heard it was that people were BORROWING vast amounts of money to invest in the stock market, but did not get enough of a return to pay those loans back, so they borrowed more money to repay the first loans . . . Kinda like the housing cave-in that happened in `08.

People dug themselves into a hole, and then tried to dig themselves out of the hole and found out that you can’t dig out by digging deeper.

Same thing, different day.

Just because you can get a loan to buy a house that you cannot ever hope to afford, doesn’t mean that you should. It all comes back to my belief that you live or die by the personal choices that you make on a daily basis.

What needs to be done is people need to accept responsibility for the choices that they make.

BF said it well. The war didn’t really bring us out of the depression. It seemed to but that was really not entirely the case. It did have more impact than BF is willing to admit, but it wasn’t the complete answer. People were the answer. People got smarter, changed their budgets, stopped using credit so heavily, etc. The government expanded its power because Rahm Emanuel was not the first person to say “never let a good crisis go to waste”.

How to catch a wild hog… How true and frightening I can best explain my concern about the new congress’s agenda, by using this analogy given to me by a former student of mine. Several years ago I was supervising a beginning teacher in a city school system. One day during our end-of-the-day feedback conference, the young man gave a facial grimace and began to rub his back. I asked him if he had strained his back in the school lab. After a long period of silence, he sat down at his desk and explained that he had immigrated to the United States because of political problems in his native country. The discomfort in his back was caused by a bullet wound he had received while fighting the Communists who were trying to take over his country’s government. He was then a member of the underground nationalist force. Then he asked me a surprising question: “Dr. Hedges, do you know how to catch a wild hog?” The question was completely out of context regarding the day’s classroom and lab teaching. I replied, “I’m not sure what you are talking about. Tell me.” “First,” he said, “you find out where the wild hogs are roaming and feeding and then you put some corn out in the field. Soon they will come to eat the corn. You keep putting out the free corn. More wild hogs keep coming to eat the corn.” “So what?” I said. “That’s normal for any animal.” “Be patient. I will tell you what comes next,” he said. “After the hogs get used to your free corn, you put up a length of fence along one side of the feeding area. The hogs get used to it. You keep giving them the corn. Then you put up another section of fence at right angles to the first. You keep giving them the corn. The hogs get used to the second fence. Then you put up another length of fence at right angles to the second section. You now have a U-shaped fenced area. The hogs get used to that section of the fence. You keep giving them free corn. Then you put another section of fence with a gate in it, making a closed area except for the gate. You keep giving them corn. Now, the hogs no longer are out in the fields, working to find their own food. They keep coming into the area to eat the free corn. They get used to the fenced area with the open gate. Then, one day you slam shut the gate when the hogs are inside the fenced area. The wild hogs are caught – they are your prisoners.” I understood then that the wild hogs were really the people of his native country and that the free corn was the enticements that the Communists were giving to the people. “That’s correct,” the young man said. “Now, the hogs will not get anything to eat unless you give them food. You are in control. They depend on you to feed them, or they will starve. They can’t get out into the fields and forests anymore to find their own food. They have probably forgotten how, as it is. They are your servants, your prisoners. They must obey you. Or else they starve. “The hogs,” he said, “were so accustomed to having the free corn, that they ignored the building of the fences that would eventually trap them. When the gate slammed shut, it was too late for them to realize what they had been blind to. The free corn was enticing, so effortless to obtain, but eventually the cause of their loss of freedom. The fence had been built; the gate had been shut.” At this point in our conversation, the young teacher, in a voice shaking with emotion and with fists hitting the desktop, loudly exclaimed, “This is what I see happening in America today! People are being offered free corn by the government. People are being blind to the fences being built around them by the liberals – the socialists – and that is what frightens me! Just like it was happening in my homeland. The American people do not learn from history. And history shows that socialism/communism does not work. Take note of Russia. Has socialism been the best thing that ever happened to that country? Absolutely not! But socialism is what the American people are being fed, and they don’t realize it. All they can focus on is the ‘free corn.’ They want more and more of the free corn. And this free corn is being fed to us little by little, and soon the gate will slam shut. I am very frightened, and also amazed, that the American people don’t see what is being fed us, and for what purpose.” With that said, the young man sat down at his desk and continued to rub his painful back. And I was silent in my chair. And afraid. For I could visualize the supposedly “free corn” being fed to our nation’s people and our growing addiction to the “free corn”. And I could see the gate being slammed shut. We, the people of the United States of America, because of our ignorance of history, because of our addiction to the supposedly “free corn,” could soon be prisoners of liberal socialism. Along with this fighter for freedom from socialism/communism, I too, wanted to slam my fists on the desktop and cry out in a loud voice for all to hear, “Wake up, America! The fences are being built! Don’t you see what is happening to us?” In the agenda of the new Congress governed by the liberal Democrats, there is much “free corn” being promised the American people. In our greed for this “free corn,” will we ignore the incremental building of the fences and the inevitable shutting of the gate? As I ponder the building of the fences now underway by the new Congress, I remember the old adage, there is always free cheese in a mousetrap.” It seems the only thing we learn from history is that we do not learn from history. Lowell E. Hedges is a retired associate professor of teacher education and a former superintendent of Elgin Local Schools J. A. Coe

A friend of mine has a son in the 5th grade at a local public school. His son was givin a worksheet to complete for homework.

The worksheet consisted of a list of “problems” down the left side of the page, and a list of government agencies down the right side of the page. The assignment was to match up each “problem” with the “appropriate” government agency that you would go to in order to get help with your “problem”.

My friend talked about this with his son, and said, “You know, the people you should go to first when you have these sorts of problems are your family, your friends, your church, your local charities, and other places like that. These are not the sort of “problems” that the government should be in the business of trying to solve.

My friend’s son, as his homework on this worksheet, did not draw lines connecting each “problem” to the “appropriate” government agency that one should go to for help with each “problem”. Instead, he liked what his dad had said so much that he wrote about a 250 word essay on how people should rely on their family, friends, neighbors, churches, and charities for these sorts of problems.

He was NOT given an “F” on the assignment (after all, the public schools are not allowed to give students “bad” grades anymore); however, he was given and “incomplete” on the assignment and told to complete the assignment according to the instructions on the worksheet. He was also told that his final grade on the assignment would be reduced because the “corrected” worksheet would be submitted past the original deadline for the assignment, and therefore it would be considered “late”.

OK Texas, time for a little humor. Thought I had better get that up front.

Given current media tendancies I can hear the screams now:

“Are you calling liberal and democrats pigs?”

“Are you calling the president a hog? That is an outrageously rascist accusation.”

I also add this point of order. We will no longer have to fear being fed all this free corn. WE ARE GOING TO BE USING IT FOR ETHONOL TO FUEL OUR CARS. Maybe free Tofu…..but that probably wouldn’t be as effective. Who’s going to go out of their way for Tofu?

Great Post Texas
I also will share with others.
Keep smiling and stay free
JAC

Your post remimds me of something I told a friend the other say. Instead of the wild hogs, I told him I feel like a zebra watching the lions build a cage around my herd. I try to sound the alarm, but know wants to listen…….

I read a post by our friend Canadian Fox and he states that by dwelling on the past we will not be able to solve the problems of today. I think that he is wrong. I think that because America does not pay attention to her history she is doomed to repeat it. I was reading US’s article and thinking the same thing. Why is it that those who are elected to guide us aren’t looking to history and seeing that these things didn’t work then, they won’t work now?

It did work for the people in power, just not for anyone else. I am certain that there are many (most?) govt leaders who are seeking power, pure and simple. There are others who are confused or ignorant (they are after all human and not an elite).

Excellent point Michelle. To answer Kristian’s question we would have to first ask whether those in Washington are interested in making the economy better and the Us stronger, or whether they are interested in expanding government’s scope and reach. If it is the former, it would be amazing that they weren’t seeing the mistakes of history. But since I imagine there are smarter people in DC than that, my gut tells me that they understand that the past shows great examples of the success of these policies in expanding government control. And that is why they are repeating them.

To be truthful Texas, I don’t think it will come to any states seceding or civil wars. In fact I would bet that if we are able to whether this storm, half of those now paying attention will stop doing so. The parties will continue to take turns pretending to control the other side, and it will just continue to get worse. To use the pig analogy shared earlier, We are seeing the third side of the cage being erected and are up in arms about it. But soon enough, the bushes will grow up around that section and we will go back to eating corn until it is too late and the gate slams shut.

When that happens, perhaps people will revolt. I don’t think it will happen in my lifetime though.

I don’t know about that US.I paid my income taxes the other day and after I figured in sales tax,gasoline tax,telephone tax,school tax,real estate tax,vehicle registration tax,trailer registration,boat registration,social security,medicare and I’m sure I left some out I paid approximately 40% of my income for taxes.That is utterly ridiculous and unacceptable to me.I feel as if my family and I have been robbed.Now you can bet with cap n trade coming energy prices will skyrocket.I don’t know if any of you remember when the price of natural gas basicly tripled about 6 years ago but it cost the company I was working for then three million more a year to operate since our boilers, flares, motors and furnaces ran on natural gas.My unit eventually was shut down and I was laid off.

I have worked my entire life since I was 15 helping my dad in the oilfield after school with his business.I worked full time for the Texas Department of Corrections as a corrections Lieutenant straight out of highschool while going to college with no student loans.Tripled my yearly salary when I left that shit hole and should be reaping the benefits of my hard work.I am sure most Americans have similiar stories and are just as fed up as I am with it all as I am.

It simply infuriates me that my country sends so much foreign aid overseas to our enemies.My country is willing to pay for the education of foreigners that have the potential to become enemies to my country.We have greedy powermongers in office that cater to the super wealthy instead of the needs of the American citizen and are willing to sell this country out for pure personal gain.I am sick of it and we need to get the meesage out to people instead of being so apathetic.

Since Obama and the democrats are setting the policy of America for the next couple of years people should know who is behind this.These leftist nutcases are merely puppets to this man George Soros.Thats the guy who busted the Bank of England a few years back and made a billion dollars off it.Right now he is raking in millions off hedge funds due to the American recession.
This is not a conspiracy theory people I make my observations based of off factually gathered data.A little investigating on your own and I’m sure you would draw the same conclusions.

I do not have very much time today but I would like to share this with everyone in a quick manner ( I hope I will have more time tomorrow or Sunday). Did anyone watch the Jon Stewart show last night? I know, most of you would scream liberal but I think he is hilarious and sometimes humor is the best way to learn. Anyway if you saw it you will know that the lady that is in charge of the TARP money was on. She had a great explanation of the past “boom and bust ” cycles stretching back to 1776. And what the gov’t had to do to fix that (and the positive result). At a later post I will attempt to explain it the way she did. It was simple and to the point and SOMEWHAT refutes eveyone’s fear on this blog of government “interference or control”. I agree if a gov’t interferes too much only bad can happen. But little or no regulation as the population grows? Nope, it is necessary. I will also take the time to read USW’s post. It looks as if he put a lot of work into it. Gotta go.

Thank you for opening my eyes on Woodrow Wilson. I’m kind of sad now. He was some kind of role model for me. He put my thoughts into words. Since I know that he probably was the first President who started the US on their road to socialism I’m really disappointed in his dishonesty.

“Liberty has never come from Government. Liberty has always come from the subjects of it. The history of liberty is a history of limitations of governmental power, not the increase of it.”

How can he say that and do the opposite? At least it’s true.

“America lives in the heart of every man everywhere who wishes to find a region where he will be free to work out his destiny as he chooses.”

“America was established not to create wealth but to realize a vision, to realize an ideal – to discover and maintain liberty among men.”

“I would rather belong to a poor nation that was free than to a rich nation that had ceased to be in love with liberty.”

“Never attempt to murder a man who is committing suicide.”

“The only use of an obstacle is to be overcome. All that an obstacle does with brave men is, not to frighten them, but to challenge them.”

“The world is not looking for servants, there are plenty of these, but for masters, men who form their purposes and then carry them out, let the consequences be what they may.”

“You are not here merely to make a living. You are here in order to enable the world to live more amply, with greater vision, with a finer spirit of hope and achievement. You are here to enrich the world, and you impoverish yourself if you forget the errand.”

Notice how some of these statements are in conflict with each other, if you get to the principle that supports them.

The one honest thing Wilson had to say, at least I think so, came after his last term when he stated that his greatest regrest was having supported creation of the Federal Reserve. He felt he had been duped into giving up our country’s liberty. Of course he forgot to mention the impact his policies had on “our” liberties.

Welcome! I hope you enjoy your stay here. I am sorry to have hurt Wilson’s image in your eyes. I can tell you that this happened to me many, many years ago. I left school as a teenager with the image of FDR and Lincoln as the greatest Presidents. Lincoln had taken a stand against slavery, which I despised. FDR had used the New Deal to save the country during the Great Depression. That is what I had been taught. But I am a critical thinker by nature and question everything. Eventually I began to read and learn and found that they were not really quite the same as I had been taught in school. It really hurt my feelings to find out the truth.

My point was not to say that any of the Presidents above were bad people or even that they were not good Presidents. It was only to show how their progressive leanings impacted current realities. These three implemented a lot of things that took away individual liberty. And I think it is important to see that even popular and well known Presidents had a major hand in the decline of liberty. I still like FDR and Teddy quite a bit, but what they did while in office had some lasting negative effects.

I don’t think I have the answer yet. Time will tell for me. I am still trying to figure him out. Is he a puppet? Is he a pawn? Is he the mastermind? Imagine if his programs actually worked. I know many here don’t believe that possible and we oppose him vehemently for that. But what if they did?

A bit of actual history for you, USW, as told to me in my early youth from one who actually lived it; My Mother.

My mother was born around 1910. She grew up during WW1 and the “boom time” of the 1920’s. My oldest brother was born in 1926 when my mother was only 16, but that is another story. My Grandfather died in a logging accident when my mother was in third grade, and as a result she was taken out of school and put to work as a seamstress to help feed the rest of her siblings, they totaled four girls and two boys. Since having babies out of wedlock in the 1920’s was considered a “cardinal sin” she was forced to marry. As a young wife and mother during the 1930’s with nothing but a rudimentary 3rd grade education, she was very cognizant of all the FDR “New Deal” programs. She had pet names for all of them, which I shall not reveal due to the civilized nature of this blog, but the one she hated the most was Social Security. “Ain’t nothing but government welfare!” she would tell me, “Just another way for government to steal what you have worked so hard for!” She knew all about hard work. I watched that woman work sometimes three part time jobs just to feed, clothe, and house all of us. She never took one dime of welfare, her pride wouldn’t let her. She told me that she had voted against FDR(against her husbands wishes) each time. I remember accompanying her to the voting places when I was little, “This is the most important thing an American can do” She told me, “This is how we make our voice heard.”

I have never missed an election.

Some of the FDR stuff actually helped – but the Hoover Dam was almost accredited to him, and it wasn’t his doing.

My mother believed that Social Security would lull people into not preparing for their own retirement, and she was right. I know people who are living off just their Social Security and I just don’t know how they do it. They are forced to live in retirement centers in the midst of crime ridden cities and cannot go anywhere. They rely on Medicare and Medicaid for inadequate health care. This is not life, it is just barely existing.

We have taught our children to be self sufficient, I hope, and I also hope that our grandchildren do the same. That is what we need to teach people all across this country – self sufficiency, NOT government dependency! For someone only having a third grade education, my mother was a very intelligent lady!

Thanks for that story of your Mama, G.A.. That tells a world of good about you also.

Your Mother sounds a lot like both sets of my Grandparents. Probably has a lot to do with why my parents and my brother and I feel the same way. All of us were poor. For that matter, I still am! But we didn’t then and don’t now want to be dependent on the Government. But then, unlike some, I’m smarter than a wild hog! (thanks for your story too TC)

Funny thing about growing up poor. We didn’t know it until we got to be adults . . . 😉

Also you learn to really appreciate the things that you work for, I guess that is why I still drive a nine year old pickup that works like it was brand new. Incidentally, it is a Chrysler product. I will miss their products when that company goes under.

Although I am ONLY 45, we wuz dirt po’ when I was little. My Daddy was a House Painter. You work like a dog in Spring and Summer so you don’t starve in Fall and Winter. I did that from the time I was about 9 or 10 in the Summer till I was 26 before I decided working in a Plant was better than that.

My family lost almost everything we had during the Jimmy Carter fiasco(I won’t give it the priviledge of calling it a Presidency). There were times we had beans and cornbread alone for a week at a time. And we were grateful for that. We had patched clothes and worn out shoes. But, my parents saw to it that we weren’t naked nor hungry. I don’t remember thinking about it much because everybody aroung us were in the same shape. We were poor, but we were happy. And we were beholden to no one!

My Parents have apologized to me and my brother for us not having things and for the way they raised us when they were young. Quite frankly, that aggravated me when they did. We may not have had money or lots of toys. And they may have made a few mistakes as parents (I don’t remember any)when we were little. But By God, we were raised, and raised well in my eyes!

Certainly much better than a lot of the punks I see running the streets these days. Most problems of the young could be resolved when still small by a good old fashioned ass-whipping! Not Child Abuse. Child discipline. I NEVER got a whippin’ that I did not well deserve! And I got my butt tanned many a time too!

Good job USW….believe it or not 2 days ago I was investigating this same point in history under the umbrella of “when did the USA government become responsible for disaster relief, wefare, unemployment, infastructure….ect”? Conclusion….if it had not been for WW2 we would never have recovered from the depression. Government intervention did not solve the problem although we did get some roads, utilities and dams out of the deal….did little for the economy but in the long run gave us some nicities.

I agree. While war is not the answer, there is no doubt that it enabled us to recover. It gave Americans a sense of purpose and a resolve. It showed America once again that there were things worth fighting for. The interesting thing is that the government works programs, in my opinion, DID help. They were not the entire answer, but they provided the ability for many heads of families to put food on their table. What should have happened, however, and should happen in every situation like that including now, is that the power government grabbed should have been surrendered once the crisis passed. I might have supported government intervention if legislation had a clear end date that reverted the power back to the people. But that is not how government plays the game. What they take, they keep, no exceptions.

Correct sir. But if I said Eidetic Memory, I would have added another paragraph and a half explaining it cause I never know when to shut up, lol. The article was going to be long enough! Thanks for the clarification sir.

As I sit here and consume all the comments, I can’t help but see what govt intervention in the past is responsible for the problems we see today. One of those programs (which I want completely outlawed) is WELFARE. Welfare checks, food stamps, govt owned low income housing, and medicaid is the end of a trail. The welfare rats (those that have all the above mentioned handouts) are where we can find our most crime ridden parts of our cities, where drugs and prostitution and theft and murder (you get the point) are most common an a day to day basis. And of course, this has now led Mexico to basically blameing the U.S. for the drug war down there. The sad part is Mexico is right. This one government program (welfare) has probably caused more deaths than all the cancers known to man. Yet, welfare continues to survive.

We have to be careful to claim that the War “.. essentially caused a huge economic boom.

Building tanks, ships, bullets, and planes are destructive to the economy. Essentially, they are no different then building a house and burning it down. Rebuilding the house, and burning it down again – over and over, does not improve the economy, but consumes resources and manpower without any gain, and consumes wealth.

Simply because people are busy does not make an economy.

The upcoming economic tsunami is directly the result of the failure to reckon the economic disasters of the WW1, WW2, Korean War, Vietnam War, and every “War” since, including the War on Poverty, Drugs and Terror. All of these have destroyed massive amounts of wealth – and the use of fiat currency with unlimited expansion of credit has delayed the required reset of the economy to face this economic destruction.

The slaughter millions of people did change the distribution of wealth – similarly as did the Black Death in Europe – which seemed to create an economic expansion.

“Building tanks, ships, bullets, and planes are destructive to the economy. Essentially, they are no different then building a house and burning it down. Rebuilding the house, and burning it down again – over and over, does not improve the economy, but consumes resources and manpower without any gain, and consumes wealth.

Simply because people are busy does not make an economy.”

Um… by your own argument, CONSUMPTION does not make an economy. Repeatedly buiding a house and burning it down would be an example of consumption (ableit a really ridiculous one). However, if houses were meant to be lived in for one week and then disposed of, this would be no different than what happens to the majority of consumable products we use every day.

We make light bulbs to light our homes and places of business. They eventually burn out. Because they burn out means that the people making them and the people using them do not constitute and economy?

The tanks, ships and planes in WW2 were used in the prosecution of a War, so they were only an expense to the government and not a source of profit for the government. I will OBVIOUSLY grant you that.

However, the people making the planes, tanks, and ships were getting a paycheck, which they were then able to use to purchase food, clothing, housing, vehicles, etc. This DID cause the economy “boom”.

The net cost of the war to the country as a whole was a large negative number, that is for certain. However, to say that it only SEEMED to create an economic expansion is overly simplistic.

By seeing, we do something else which creates wealth, such as building a house. The benefit of the light bulb is additive the the wealth of the house – without the light bulb, the house might not be built well, or at all.

Building a tank does not do this. True, you can use a tank to steal wealth from someone else, but that is wealth redistribution not creation. There is a massive loss somewhere for your gain.

You are inflicted with the “Broken Window” economic fallacy. You are not alone – it is probably the #1 economic fallacy held by people.

You see government seizing money and building tanks, and paying money to people who build tanks so that they buy food.

You believe that without the government doing this, there would be no money.

What you see is a tank being built.

What you do not see is the house not being built.

By taking the money from ‘over there’ prevents the creation of what that money would have made. But since it does not exist, you do not see it, and thus, you do not account for it.

Bastiat’s “Broken Window”

Have you ever witnessed the anger of the good shopkeeper, James B., when his careless son happened to break a square of glass? If you have been present at such a scene, you will most assuredly bear witness to the fact, that every one of the spectators, were there even thirty of them, by common consent apparently, offered the unfortunate owner this invariable consolation—”It is an ill wind that blows nobody good. Everybody must live, and what would become of the glaziers if panes of glass were never broken?”

Now, this form of condolence contains an entire theory, which it will be well to show up in this simple case, seeing that it is precisely the same as that which, unhappily, regulates the greater part of our economical institutions.

Suppose it cost six francs to repair the damage, and you say that the accident brings six francs to the glazier’s trade—that it encourages that trade to the amount of six francs—I grant it; I have not a word to say against it; you reason justly. The glazier comes, performs his task, receives his six francs, rubs his hands, and, in his heart, blesses the careless child. All this is that which is seen.

But if, on the other hand, you come to the conclusion, as is too often the case, that it is a good thing to break windows, that it causes money to circulate, and that the encouragement of industry in general will be the result of it, you will oblige me to call out, “Stop there! your theory is confined to that which is seen; it takes no account of that which is not seen.”

It is not seen that as our shopkeeper has spent six [ 52 ]francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented.

Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs: this is that which is seen.

If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs: this is that which is not seen.

And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labour, is affected, whether windows are broken or not.

Now let us consider James B. himself. In the former supposition, that of the window being broken, he spends six francs, and has neither more nor less than he had before, the enjoyment of a window.

In the second, where we suppose the window not to have been broken, he would have spent six francs on shoes, and would have had at the same time the enjoyment of a pair of shoes and of a window.

Now, as James B. forms a part of society, we [ 53 ]must come to the conclusion, that, taking it altogether, and making an estimate of its enjoyments and its labours, it has lost the value of the broken window.

When we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end—To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”

What will you say, Monsieur Industriel—what will you say, disciples of good M. F. Chamans, who has calculated with so much precision how much trade would gain by the burning of Paris, from the number of houses it would be necessary to rebuild?

I am sorry to disturb these ingenious calculations, as far as their spirit has been introduced into our legislation; but I beg him to begin them again, by taking into the account that which is not seen, and placing it alongside of that which is seen.

The reader must take care to remember that there are not two persons only, but three concerned in the little scene which I have submitted to his attention. One of them, James B., represents the consumer, reduced, by an act of destruction, to one enjoyment instead of two. Another under the title of the glazier, shows us the producer, whose trade is encouraged by the accident. The third is the shoemaker (or some other tradesman), whose labour [ 54 ]suffers proportionably by the same cause. It is this third person who is always kept in the shade, and who, personating that which is not seen, is a necessary element of the problem. It is he who shows us how absurd it is to think we see a profit in an act of destruction. It is he who will soon teach us that it is not less absurd to see a profit in a restriction, which is, after all, nothing else than a partial destruction. Therefore, if you will only go to the root of all the arguments which are adduced in its favour, all you will find will be the paraphrase of this vulgar saying—What would become of the glazier, if nobody ever broke windows?

In terms of ending the Great Depression, WW2 was an ecomnomic boom. It took a bunch of people who were out of work and gave them all jobs that paid tremendous wages compared to what they had been making during the Depression (which was nothing)… They were then able to go out and save this money (bringing back the banks) and spend this money (bringing back the need for goods to be produced).

Of course, the War cost the Government a trememdous amount of money. Therefore the “boom” caused by the war was really no more than an “economic bubble”.

The housing bubble is in some ways very analogous. The Government pushed banks to make money for housing available to anyone regardless of whether these people could afford a house or not. Housing prices shot through the roof due to a boom in demand. Demand for second mortgages and HELOCs exploded as the “value” of property skyrocketed over a brief period of time.

Eventually, the people who were loaned money that could never afford to pay it back became unable to pay it back regardless of how “good” the economy got, so the bubble burst and got us to the point we are at today.

In the case of both the WW2 economic boom, and the 2002-2007 housing boom, both were (overall) highly destructive to the economy in the long run. However, in the short run, they were seen as “booms”. Perhaps I should have used the term “bubble” instead and it would have been more accurate.

In the case of WW2, it had the ancillary boom effect of really revving up the industrial base in the country. Once the war was over, people suddenly had money to spend again, and America had the spare industrial capacity to keep up with the new demands of these consumers thanks to converting many factories from war-time production to consumer-driven production in record time following the war. Due to this new-found “prosperity” people began to breed like rabits (which is pretty natural after a major catastophic event that decimates a large portion of the breeding-age population) and the resulting population boom furthered economic demand for all of the new products available. In this sense, the after-effects of WW2 on the economy were a bit more sustained than the average “bubble”. It wasn’t really until the 1960s when the Government really started on the road toward “redistributing the wealth” when the WW2 bubble finally burst.

Your economic vision is shortsighted – you want to stop people from suffering; which is laudable – but it only perpetuates the suffering over a longer period of time, and only makes it more harsh.

The purpose of a Depression is to realign the economy back to a sustainable function. The reason a Depression happens is because there has been a massive misalignment – the case in the 30’s was WW1. Governments decimated their respective economies, and in an attempt to hide the economic devastation, printed money.

This caused an artificial boom we know as the “Roaring 20’s”. This had severe decremental effect of preventing the economic reset required by the war’s destruction. This reckoning could no longer be delayed by the 30’s, and with the false boom in the economy, made the correction even worse.

The infusion of easy fiat money deluded the thinking and decisions of business managers – who thought the boom was real. Businesses were created that could only be sustained by further infusions of easy fiat cash and inflation. When Depression hit, these businesses were unsustainable and were closed.

The unemployment is a feature of massive inflationary policies being corrected. It is a requirement to adjust the employment of people away from inflationary (ie: wealth destroying) business and into real wealth creation.

By preventing this through government bailouts or “make work projects” is disastrous.

Wealth-building businesses are still starved of working people. The way you get out of a economic downturn is to increase production and reduce costs.

The high unemployment reduces the cost of labor. The high availability of workers increases productivity capacity. The drop in the standard of living realigns the economy to its true level until productivity and costs begin to once again improve.

But with government jobs, all of this is delayed. Productivity does not increase. Labor costs do not decrease. There is no excess capacity in labor. Life styles do not change.

Thus, we see what happened. A Depression lasting for decades.

In terms of ending the Great Depression, WW2 was an ecomnomic boom.

No, it was an economic disaster.

This is important to understand for it also explains why today’s economic disaster will be horrific.

Depression was the contraction of the economy from its inflationary level back to its real level. All the fiat, inflationary, cash that was thrust into the economy had to be bled out. The contraction of fiat cash was forcing the economy to reset to its real level

The war allowed governments to inflate the currency once again – reversing the very thing that the economy required to fix itself.

This gives the appearance of a boom, but just as what happened in the 20’s – the war inflation simply deferred the correction into the future.

Peter and BF you are both essentially right. Peter is right in that the war caused an economic bubble by putting people to work and building a manufacturing base. But it also gave our government the real clue it needed to try and control our economy. Thus the government learned they could cuse inflation by printing money, controlling the interest rates and manipulating the stock market. For nearly 70 years our government has played the devels advocate and caused bubbles and busts. Only thing is they got just a little carried away with this housing bubble and their old fixes and games are not working. The reason it is not working is that the government caused such a hugh bust that the people became frightened (or smarter) and saw what was going on. The people that had money started stripping it back to safer places and the people who had no money could not get any. Credit pushed us to this problem just like in the 20’s and it will be a hard row to plow before we really come out of it. It will probably take some in scope similar to WW2 (not suggesting another war) to cause enough of a bubble to get us up and going again….that is why the government is so pushing the banks to lend money. If you will read or if you are old enough people in the late 40’s-60’s would buy very little if nothing on credit. They saved for their houses and cars ect. They saw what happen in the 20’s when credit got to loose.

AHH BF you missed my point. I agree wars are devestating on economies, all economies. The large scope I was talking about was not a war, I was stating it would take something big like a brand new industry, or new technology to inspire job growth factor world wide. It just happened to be WW2 that sparked that growth of jobs. Wars are way to costly to inhance an economy by theirselves. My point was the government realized hey we can play games that have an effect on the economy….we can print more money (cause inflation) we can play with the interest rates (controlling credit) we can dabble in the stock market and bonds….and they did all this for years and kept the economy moving up and down. The free credit and ficticious housing bubble caused this crash. It just happen to come at a time when war was already causing its known damage thereby compounding the problem. The war affect will probably take many years to recover from. Believe me BF I would not suggest that a war was good for anything especially a global war.

Correct and that is exactly what happened ater the war. The US was a lender after the war. Since we still had our factories we produced the goods Europe needed to rebuild. Generally just like after WW1 there is a recession or depression after a war. But for the US after WW2 we got the economic kick we needed by supplying what the rest of our allies needed. Our men went from uniforms to factory job….it increased our pocket money thereby increasing our consumption. Plus we then had the consumtion of Europe too, so for many years until Europe could get there factories back on line we produced alot more than we needed. Everyone was expecting to come home from war to a depression in the US. It probably would have came back in a few years but the government started very actively playing in our montetary system. Thereby keeping us afloat. You can watch what happened to our economy after VN, Gulf ect and know that you are correct as a general rule war causes recessions and depressions. Our government just got good at dabbling in our system thereby putting things off for short periods or slowing them down.

Both Grandpa’s showed up around 1900 in the coal fields of Eastern Pennsylvania. By the time they got here, a lot of the groundwork had been laid for safer mining. Unions were in the ascendant and life, while hard was nothing like it had been thirty years earlier. This didn’t stop either of them from dying at young (42 & 55) ages from black lung.

If you have a love of history, those thirty years were really something. My dad used to say that those coal fields were the birthplace of the American labor movement.

I am not going to rehash here what it must have been like other than to refer anyone interested to a little group called the Molly McGuires.

In the ideal world, bankers, railroad men, steel barons etc would all respect their fellow man, pay them a decent wage, encourage education for their children to allow them to rise out of poverty and contribute to society as a whole. There would be no religious bigotry, no hating of the Micks, Kikes, Polacks, Bohunks or whatever. There would just be this sense of equality in the eyes of God and the Law. Well…. that didn’t happen.

So, everything had to be fought for. The government, by and large was on the side of the Corporations. Strikes were a good tool and the government broke them on a regular basis.

So, my wrestling with it all comes from the knowledge of what was and how it was changed. Can I condemn progressives? It’s very easy today to do that but if you lived in a company house, worked for the company, shopped in the company store and were unable to change any of it because you could be thrown out and replaced with some new non-english speaking immigrant at the drop of a hat, how could you condemn anyone who offered you if not a way out, at least a way up.

The pecking order in Pennsylvania in terms of abusing the immigrants went as follows. Please remember each group that went before, ultimately became the oppressor of the next group. English, Welsh, Scot, Irish, German, Pole, Slovak, Russian. Once you made it to the next rung, you were encouraged by the bosses to keep the new guys in their place.

There were certainly exceptions to the rule, but they were in the minority. The corporations, sowed strife like wheat. Even in the 1960’s when Tony Boyle of the UMW had Jock Yablonsky killed it was nothing but a continuation of the seeds of distrust that were sown generations earlier by the mine bosses. Monopolies? The railroads, mines and steel mills were all owned by the same guys. How did anyone get a fair shake?

So, I ask you all, what was the other way? I don’t know and I admit it. I guess that if my family had been in the garment business and had involvement with the Triangle Shirtwaist fire, I would still have arrived at the same place I am but through a different route.

Times have changed and I have the ability to stand back and look at the excesses of the government and unions and argue that they could have done better. But I am standing here, with my college education because of those very excesses. So, schizophrenia ensues.

The monopolies of the Rockefellers, et al, had some good in them, but I do believe that there was more bad than good. In my life experiences I have noticed that it is greed that is the damnation of a person. Greed is not a disease that can be cured, for once infected a person is totally consumed by its fire. No matter what the end object may be, greed drives those afflicted to do whatever it takes to obtain that object – be it money, power, sex, fame, drugs, alcohol, or whatever. People will walk all over another person, or as many people as necessary to achieve their greed driven goal.

Ultimately the government intervention into the monopolies continued to excessiveness, for the same reason that it was necessary to intervine in the first place – we just went from corporate greed to government greed.

You are right about Rockefeller doing some good. The whole reason he was able to make a monopoly was because he poured almost all off his profit into increasing efficiency of the production and quality of his product(oil). by doing this he slowly make his product the best, after he took his refinery all the way to peak production he would save money and buy another refinery and repeat the process. It is because of him that our refineries were some of the best in the world and to thank him for giving us this huge refining capacity our government forces him to split his company into several thereby destroying several years of hard honest work.

Regarding my post and the issues of “monopoly”, the folks that controlled Carbon County in PA 130 years ago did not control the entire indistries of coal, iron and transportation, merely a large portion of it. Upon occassion, they acted together at other times not.

Regarding workers, workers rights and benefits, they tended to act alike. Since substinance wages were about all that were paid to new immigrants, the worker’s ability to “fight” for an eq

Anyway, The workers ability to fight for a piece (not equal) share of the pie was limited. When you know you can be replaced by a new immigrant at any time, probably working for less than you did, you are in big trouble. This practice seems to continue today with the blessings of both political parties.

The interesting thing about the Carbon County area was that originally, there were many, many smaller mines. The consolidation that went on in the 1860’s I believe, led to the really big Corporations taking over and the ability of the worker to just walk away, with a few dollars in his pocket, diminish.

So, like Standard Oil, it was not that there was only one game in town, there were many, but certain industries did not practice the golden rule with their employees.

This takes us back to Molly McGuires, the Pinkertons, Coal and Iron Police, my schizophrenia and that wonderful old quote, “one mans terrorist is another mans labor organizer”.

Increasing the extent of political power to more people who are completely ignorant of what they are doing cannot be a good.

(By the way, extending the vote to men has exactly the same defect as extending it to women).

Anti-trust laws = maybe a good thing, maybe not. True, a monopolistic corporation shuts out all competition (Microsoft anyone?) and therefore can exert almost total price control.

Microsoft is not a monopoly, nor do they control the price. In fact, if it was not for Microsoft and their ability to massively reduce the cost of computing, you wouldn’t be here on this blog.

Before MSoft, an Operating System could cost a million dollars to purchase. Now, it costs a few hundred bucks. Applications costed BMS (Before MicroSoft), hundreds of thousands of dollars. You can by MSoft Office for a few hundred bucks.

Anti-trust laws are a direct and fatal attack on freedom and free market.

However, how much regulation of private corporations is good, and how much is too much?

First, there is no such thing as a ‘private’ corporation. All companies are created in the imagination of government, and as such, completely beholden to it.

Any regulation of the free market causes devastation on freedom and on the people. All intrusion of government into the economy distorts the economy away from its optimum operation of wealth creation. Any regulation will destroy wealth.

Public Works Projects to build railways, roads, and dams = meh, ok. Apparently infrastructure simply isn’t something the private sector handles very well on its own…but why not?

Private sector handles infrastructure brilliantly. It is seized by government force because it is a matter of control over the people. Keeping their fingers around the people’s throat by controlling mobility, communication and critical supply is the premeditated design.

Since free market cannot tax people to pay for highways as does the government, free market cannot compete. Why invest millions into a road, when government gives theirs away for (what appears to be) free?

Investment into infrastructure by government is an economic disaster. It is equal to paying someone out of your pocket to dig a hole and fill it again. No amount of argument can say this “creates wealth”. It creates busy. But this busy wastes human resources that could be applied to actually creating wealth.

The money needed to pay for the infrastructure must come from somewhere.

It is either extracted from the economy, thus starving wealth-building enterprises, or by inflation, thus destroying the savings of the people. The money is ‘invested’ into a project that will take a hundred years to recoup, whereas typical free market investments are recouped within a decade or faster.

The destruction and imposition of these projects on any economy is huge.

FDIC:

Does nothing for the economy. A bank failure does not extract any money out of the economy as the banks exist completely within the fractional reserve system.

Bank A fails, and cannot pay millions of little pieces of paper to people it received from the people. The FDIC simply gets these pieces of paper from the Fed, and refunds the people. Since Bank A took the paper from the people – who had to get it from the Fed – and used the paper to lend back to the people, who then spent it, with that money then put back into the banking system somewhere else, any bailout from the FDIC changes nothing in the banking system. It is all contained.

Therefore, a bank failure does not improve the systemics of the system – which is what failure should do – weed out bad decisions.

I am grasping at some of your points, although you have thus far quite beautifully explained economics with which I had not grappled. I want to know more about this last post.

FDIC: In my liberal vantage I see a value in this. In my individual life, in a free market(esque) economy a bank is something that allows me to use the capital that I gain from my employment to pay for things. It is sad and yes slightly oppressive that I cannot use cash to pay for everything, so, I have credit cards and checking accounts… And I see the FDIC as an insurance I get from the government that my money will be safe and I should continue to consume consume consume consume consume consume

Public works: I think I understand your economic problems, but I’m still missing something. I am not saying that the govt should invest in infrastructure to create wealth, but I do believe that said infrastructure is beneficial. Do you believe private enterprises will create these state and national endeavors?

With the monopoly thing… I don’t know where to even start to ask what I want to know.

I understand the attacks on the freedom the market yadda yadda and the lack of “private” companies. And yes I agree any regulation will destroy wealth. Yet, I am willing to sacrifice some wealth to reduce corruption and other negatives that a completely free market breeds. Are you truly suggesting that the best course for this country is zero regulations?

FDIC:
Of course, this entity is important for you personally – the little pieces of paper you’ve deposited with a bank will be given back to you – in little pieces of paper. As long as someone believes these pieces of paper have value, this is incredibly important. I will always advise anyone who wishes to store these pieces of paper in a bank that they follow the FDIC rules exactly.

However, economically the FDIC is a closed system. It is the left hand paying the right hand. The mechanisms of correction do not exist in the banking system, thus, at a minimum, there is a very large moral hazard for the banks to be as perverse as profit allows them.

Public works:I am not saying that the govt should invest in infrastructure to create wealth, but I do believe that said infrastructure is beneficial. Do you believe private enterprises will create these state and national endeavors?

Great question.

If the free market had a chance to provide these services, they would – just like they provide the service of food. Grocery stores are ‘everywhere’ – and food is a core service, right?

But the government will not allow, easily, the free market into infrastructure. So, truly, we are in a bad situation. Government investment here will cause economic destruction. Lack of investment into infrastructure will cause economic destruction. Government will not allow free market industries to supply infrastructure.

You can figure out the consequence.

Yet, I am willing to sacrifice some wealth to reduce corruption and other negatives that a completely free market breeds. Are you truly suggesting that the best course for this country is zero regulations?

Yes.

Think this way.

All the regulation that is on the books (more than 90,000 laws) doesn’t stop corruption. Does it make sense to claim that more regulation will stop corruption?

Corruption is caused by people failing due diligence. Would you lend money to a liar and a crook? If you do, whose fault is it if you lose all your money?

In a true free market, trust is the most valuable asset. Because no one is forced to deal with anyone else, and there is no violent mechanism of enforcement – trust with your trading partner is paramount.

Today’s system – you defer your due diligence to the opinion of some third party – who has no parallel interest of yours, is unknown to you, and frankly, couldn’t care two hoots in Hades about you. Do you think this is a good system?

What a crock.More methane is released by good ole mother nature than is released by man.

Sulfur hexafluoride is 5 times heavier than air and can be poured into containers, it doesnt mix well into the atmosphere is my point.Used in atom smashers, hrmm guess science gotta take a back seat due to global warming?

Nitrous Oxide is not released in a large enough amount by industry to warm up your socks on a cold winter day.I guess if you go to the dentist now you are contributing to global warming.

Perfluorocarbons are man made for eye surgery to seal holes in the retina.Hydrofluorocarbons: Jeesh didn’t they replace the gases in hairspray with compressed air allready?

This is a ploy to push CapnTrade.Plain and simple.As Esomhill would say complete and utter bulldookey.A big smelly crock of bulldookey!

This will affect the industry that I make my living in.I am extremely angry about this.I am about to write my state rep. and Gov.I can guarantee folks this will affect Texas economy and Texans wont stand for it.This is a prime example of the feds trying to push their weight around.Wonder how those folks up north would like it if Texas put a two dollar tariff on every gallon of fuel produced and shipped out of the state?

I saw this too, and that is exactly what I was thinking. Obama called for Congressional action to stop Greenhouse gas emissions, which means “get cap and trade passed now”. Amazing how fast this administration is moving to get all of this done before people figure it out.

I dont know G A, What if the drinking of Decaff causes GreenHouse gases? Coffee goes right through me. In the form of MeDookey. Which has Methane in it. Which is a Greenhouse Gas. With me so far? I guess they’ll have to surgically implant a catalytic converter in all our asses!

Correct and that is exactly what happened ater the war. The US was a lender after the war.

Quiz time, Amazed1.

Where did the ‘money’ to lend come from?

Since we still had our factories we produced the goods Europe needed to rebuild. Generally just like after WW1 there is a recession or depression after a war. But for the US after WW2 we got the economic kick we needed by supplying what the rest of our allies needed.

And the above paragraph is why it is so hard for so many to understand why their world is ripped to pieces in front of their eyes.

USA did NOT have a real economic boom after the war.

The USA exported its inflation caused by the war to the destroyed and defeated nations.

This exact process is also how the US paid for Vietnam war, the War on Poverty, War on Drugs, and now, the War on Terror.

Ponder this.

How is it possible for the US economy to ‘grow’ during the 1990’s while at the same time spending more on economic-destructive programs such as welfare, entitlements and armaments?

I’m not finding this boring at all! I’m thoroughly enjoying the series, and learning a lot! I am homeschooling my children, and it was through their school materials that I heard for the first time about “Civil War” being a misnomer. Fascinating stuff! I’m passing articles on to members of my church, my family, my homeschool co-op – everyone! Thanks!